In North Dakota, Walmart employees start at $17.40/hr

WILLISTON, NORTH DAKOTA–Mark J. Perry, an acclaimed economics professor and writer, recently took a trip to Williston, North Dakota. Despite its remote location, the city is in the midst of an economic boom after the Bakken oil fields began gushing shale oil.

Bakken produces one million barrels of oil per day, making it one of the top ten oil fields in the world. In return, the city’s unemployment rate has dwindled to 0.9%. Dr. Perry took a picture of Walmart starting salaries, and explained the economic ramifications this has on the minimum-wage debate

1. Walmart pays wages that reflect the economic conditions in a local market based on the supply and demand realities of the local labor market. In other words, Walmart can’t really set wages independent of market forces and it’s really at the mercy of the market in every local community. If Walmart offered the minimum wage of $7.25 per hour in the Bakken area, it wouldn’t be able to staff its stores.

2. The fact that Walmart is paying almost 2.5 times the minimum wage in Williston, ND is evidence that a single, national minimum wage for every city, county, labor market in the country can’t possibly make sense. Even proponents of the minimum wage have to agree that a single national minimum can’t be optimal for every labor market in the country. In that case, they would logically have to support thousands of minimum wages tailored to thousands of local communities, or maybe even more logically agree that minimum wages are unworkable.

3. You probably won’t be hearing anybody calling for a $15 per hour “living wage” in North Dakota, since the entry-level wages at Wal-Mart there are already above that.

4. The energy sector is the strongest sector of the US economy, and is bringing wealth, prosperity, and high-paying jobs to places like western North Dakota and south-central and western Texas.

5. Of course, what we also have here is a huge hole blown in the “we need minimum wage because businesses won’t pay good wages” argument.

Dr. Perry points out that Obama has decided not to visit “the most prosperous part of the most prosperous state in the nation” this week. Rather, Obama has decided to pay the Standing Rock Sioux Indian Reservation a visit, where the unemployment rate is 86%.

“When Obama lectures the Native Americans this Friday about jobs and economic development in their part of North Dakota, perhaps he should mention that there’s a labor shortage only a few hundred miles away, with hundreds, if not thousands of immediate openings for high-paying jobs in the oil patch.”